Canadians surveyed with Credit Protection Insurance say it is a convenient, effective, and affordable form of financial protection for mortgages and loans

Consumer expectations for claims payouts are being met by the industry

The
experience of Canadians with Credit Protection Insurance (CPI) on their
mortgages and Home Equity Lines of Credit (HELOCs) is very positive, with 87% saying
it is a convenient way to protect themselves and/or their families against
major financial setbacks arising from death, disability, critical illness, or
job loss.

Canadians
with CPI coverage also report that they are somewhat or highly satisfied with
the purchase experience overall (87%), and are confident in their knowledge about
CPI products (90% at time of purchase). In addition, CPI holders say their
expectations of the claims process are being met by the industry, with 80%
reporting satisfaction with their claims experience (94% for those whose claim was
paid).

Those
are the key findings of new public opinion research by Pollara Strategic
Insights that asked Canadians about their experience with CPI on their mortgage
and/or HELOC. This type of insurance, also known as creditor’s insurance, is
used to pay off or pay down a mortgage or HELOC, or to make debt payments in
the event of covered occurrences such as death, disability, critical illness,
or job loss. CPI coverage is typically secured through the financial
institution providing the consumer’s mortgage or HELOC financing, and it is
provided under a group policy, thereby allowing more Canadians to be insured at
economical standard group rates.

According
to the research, 83% of Canadians with CPI coverage said it is an effective way
to protect themselves and their families from unexpected life occurrences. Furthermore, 71% said that without CPI, they do not know how
they and/or their family would be able to cope, should an unexpected life
occurrence negatively impact them financially – for example, not being able to
work and earn a regular income. And 70% said CPI is an affordable insurance
option.

With
respect to the purchase process experienced by CPI holders, 87% said they were
satisfied with the overall purchase process; 77% reported satisfaction with the
product explanations provided to them; and 74% said they were satisfied with
the information provided to them to make an informed purchase decision.

Canadians
with CPI coverage also expressed confidence in the CPI claims process, and that
their expectations for claims payouts are being met or exceeded. For example, 89%
of survivors/next-of-kin who made a CPI life insurance claim reported that it
was paid. (The 89% level of CPI life insurance claims payouts reported by the
survivors/next-of-kin of CPI insureds in the survey is close to the level found
in aggregated self-reported data from CAFII members, which shows that 94% of CPI
life insurance claims were paid in the 2018 fiscal year.)

With
respect to the factors which Canadians believe are the most important when
purchasing Creditor Protection Insurance:

93%
said benefits and features of the coverage;

93%
said price;

92%
said benefit payment amount of coverage;

89%
said ease of overall purchase process; and,

88%
said being able to speak to someone to answer my questions.

Canadians
also said they have a reasonable understanding of CPI coverage terms and
limitations, and about the amount of coverage. For example, at the time of signing
up for their CPI coverage, 90% of insureds said they understood “very well” or
understood somewhat their credit protection insurance terms.

The
survey also identified some areas which CAFII members and other providers of
CPI coverage on mortgages and HELOCs in Canada can look at to improve the
consumer’s experience with this insurance.

For
example, 25% of CPI claimants said they had made a complaint about the claims
process, with the top two complaints being the following:

35%
complained about the length of time it took to process the claim; and,

32%
complained about the lack of updates during the process.

However,
85% of claimants who made a complaint said they were satisfied with how their
complaint was handled.

Furthermore,
some 22% of CPI holder respondents expressed a lack of confidence that a life
insurance claim would be paid, without even having made a claim. As this level
of confidence is well below the actual claims payout ratio, it is an issue that
is concerning to the industry.

“We’re
pleased that Canadians feel Credit Protection Insurance is a convenient, effective
and affordable type of financial protection for them and their families,” said Keith
Martin, Co-Executive Director of the Canadian Association of Financial
Institutions in Insurance (CAFII), which commissioned the Pollara research. “However,
the survey also shows that there is room for improvement. As an industry, we
will continue to look for ways to improve customer satisfaction, and enhance
the value to consumers of the Credit Protection Insurance products that our
members provide.”

These
are the key results from a national online survey of 1,003 adult Canadians who
have Credit Protection Insurance on a mortgage and/or home equity line of
credit. The survey was conducted from October 3 to 16, 2018.

About CAFII:

The
Canadian Association of Financial Institutions in Insurance is a not-for-profit
industry Association dedicated to the development of an open and flexible
insurance marketplace. CAFII believes that consumers are best served when they
have meaningful choice in the purchase of insurance products and services.
CAFII’s members include the insurance arms of Canada’s major financial
institutions – BMO Insurance; CIBC Insurance; Desjardins Financial Security; National
Bank Insurance; RBC Insurance; ScotiaLife Financial; and TD Insurance – along
with major industry players Assurant; Canada Life; Canadian Premier Life
Insurance Company; CUMIS Services Incorporated; and Manulife (The Manufacturers
Life Insurance Company).

About Pollara
Strategic Insights:

Founded
in 1980, Pollara Strategic Insights is one of Canada’s premier full-service
research firms – a collaborative team of senior research veterans who are
passionate about conducting research through hands–on creativity and customized
solutions. Taking full advantage of their comprehensive toolbox of
industry-leading quantitative and qualitative methodologies and analytical
techniques, Pollara provides research-based strategic advice to a wide array of
clients across all sectors on a local, national, and global scale.